Paul Manafort resigned as campaign chairman after it emerged he had worked as a covert lobbyist for a pro-Russia party in Ukraine.
Photograph: Matt Rourke/AP

Donald Trump’s former campaign manager Paul Manafort once offered to help Vladimir Putin advance Moscow’s interests as part of a multimillion-dollar contract agreed with a Russian billionaire with close ties to the Kremlin, it has been reported.

According to a report by the Associated Press released on Wednesday, Manafort proposed a confidential strategy in 2005 whereby he would influence US politics, business dealings and news coverage inside the US, Europe and the former Soviet republics, in a way that would benefit the Putin government.

The explosive allegation comes days after James Comey, the FBI director, confirmed before a congressional hearing that the FBI was investigating Russian interference in the 2016 election and possible coordination between the Kremlin and Trump campaign officials. While Comey repeatedly refused to name the subject or subjects of the investigation, Manafort is one of several former Trump campaign officials known to have ties to Ukraine and Russia.

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It is not clear based on the AP report whether Manafort, a longtime Washington lobbyist, followed through on his pitch to help Putin. But the AP said the detailed offer was made to the Russian aluminium magnate Oleg Deripaska, a close ally of Putin for whom Manafort worked.

Citing interviews with several people familiar with the payment, AP said that Manafort signed a $10m annual contract with Deripaska that began in 2006. The business relationship lasted until 2009, it reported, based on one person familiar with the work.

According to a 2005 memo by Manafort to Deripaska obtained by AP, Manafort said: “We are now of the belief that this model can greatly benefit the Putin government if employed at the correct levels with the appropriate commitment to success.” He added that he could offer “a great service that can re-focus, both internally and externally, the policies of the Putin government”.

In a statement, Manafort told the Guardian he had “always publicly acknowledged that I worked for Mr Deripaska and his company, Rusal, to advance its interests”.

“For example, one of the projects involved supporting a referendum in Montenegro that allowed that country to choose membership in the EU, a measure that Russia opposed,” he added. “I did not work for the Russian government. Once again, smear and innuendo are being used to paint a false picture.”

He told AP: “I worked with Oleg Deripaska almost a decade ago representing him on business and personal matters in countries where he had investments. My work for Mr Deripaska did not involve representing Russian political interests.”

White House press secretary Sean Spicer attempted to distance the administration from Manafort, saying his work for Deripaska happened during “the last decade”. Trump was not aware of Manafort’s clients from that era and there were “no suggestions” Manafort did anything improper, Spicer said.

Earlier this week he had claimed the former campaign chairman had played a “very limited” role for a “very limited amount of time”. But the AP reported that Manafort and some of his associates remained close to Trump’s inner circle, and Manafort told a colleague that he continues to speak to the US president.

Deripaska, one of the richest men in Russia, is considered one of Putin’s closest allies. A spokesman for Deripaska declined to answer questions, AP said.

The revelations are important because they appear to show that Manafort had much closer links to Russia than was previously known. Among other new details, AP reported that Manafort had made plans to open an office in Moscow and that some of the work that Manafort did in Ukraine – work that was already publicly known – was actually directed by Deripaska.

AP also reported that Manafort allegedly told Deripaska in 2005 that he was pushing policies as part of his work in Ukraine “at the highest levels of the US government – the White House, Capitol Hill and the State Department”, and claimed to have hired an international law firm with close ties to the then US president, George W Bush, to support his clients’ interest.

It is not known whether Manafort is a subject of the FBI’s counterintelligence investigation. But his name was mentioned more than two dozen times by members of Congress in their questioning of Comey.

AP reported that Manafort did not disclose his lobbying work to the US Department of Justice at the time that his contracts were in place, a requirement for so-called foreign agents – people who lobby on behalf of foreign leaders or political parties. Failing to register is a felony punishable by up to five years in prison and hefty legal fines.

According to the AP, the $10m contract that Manafort eventually sealed with Deripaska was agreed through a Delaware-listed company called LOAV Ltd, which used his former address in Alexandria, Virginia. Manafort now owns an apartment in Trump Tower in New York City.